One Year Ago: Catalogs Finding Niche In New E-Landscape

Originally published on December 9, 1999 and brought to you today as a time capsule.

The great American tradition of shopping by catalog is reinventing itself to fit into the new electronic frontier.

There may be no greater example of this trend than Fingerhut, a Minnesota firm that has been shipping home furnishings and clothing by catalog for more than half a century. The company, once considered by many observers to be old hat, has become one of the Internet’s leading distributors, efficiently fulfilling orders for online powerhouses such as eToys.

New firms like eToys and established firms like Pier 1 that have now gone online seem to prefer utilizing Fingerhut’s 4.5 million square feet of warehouses to constructing their own.

In a word, Fingerhut survived by diversification.

New Strategies

While many brick-and-mortar companies were slow to accept the coming power of e-commerce, catalogs quietly insinuated themselves into the new world of online buying. Consider:

  • 85 percent of catalogs are now online.
  • The Direct Marketing Association (DMA) reports that 60 percent of catalogs with a Web presence have been online for three years. Further, 17 percent have been online for more than three years, far longer than most e-tailers.
  • By the end of 1999, total offline and online catalog sales are expected to have increased by nine percent to $93 billion (US$). Catalog product sales leaders traditionally have included books, CDs and videos, which are already some of the great e-commerce success stories.

Multimedia Retailing

With numbers such as these, it is no wonder that the catalog business is spreading its wings into new territory. To compete with the myriad of options available to consumers, catalogs have shown a willingness to try new approaches to selling, including the launch of full-fledged online catalogs and the opening of brick-and-mortar stores.

L.L. Bean, the 87 year-old traditional catalog retailer, is currently building its first full-line store outside of Freeport, Maine, in a northern Virginia shopping mall.

Other offline catalog companies are embracing new technology as an extension of their established business practices. Lands’ End, a 36 year-old offline catalog company, has created a Web site that takes advantage of 3-D presentations of apparel and allows shoppers to use a mouse-click to connect to a live customer service representative by telephone or computer.

Not only is the approach innovative, but it proactively addresses one of the main emerging complaints among online shoppers: The lack of a human touch.

Old Catalogs, New Tricks

If traditional business has learned one lesson from e-commerce, it is that successful endeavors have to be able to reach consumers through more than one sales path.

In fact, successful sales efforts sometimes rely on a full reversal of marketing techniques. For example, more online catalogs will likely turn up as storefronts in malls.

According to the November issue of Consumer Reports, shoppers prefer e-catalog to traditional catalog shopping about half the time. Surveying 25 retailers who also have Web sites, the study states that, “With few exceptions, both the paper catalogs and the Web sites delivered the goods — as ordered and on time. The shopping experience was another matter.”

The upshot is that the Web sites were lacking in some of the same areas as other e-tail sites, including security, return policies, shipping costs and infrastructure.

Still, Zona Research, Inc. reports that catalog Web sites are improving and may one day surpass paper catalogs by offering a more personalized shopping experience that includes shopping tips tailored to individual consumers.

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